“What is the single greatest obstacle to economic development in upstate New York? It is high taxes. Period. … What would the optimal solution be? Zero taxes.”

So said N.Y. Gov. Andrew Cuomo July 10 in discussing the state’s new program, START-UP NY (SUNY Tax-Free Areas to Revitalize and Transform Upstate NY), at Friends Hall at Cornell.

START-UP NY aims to generate economic growth and make upstate New York competitive nationally by eliminating all taxes – including business, corporate, sales, property and income taxes for owners and employees – for companies that partner with a college or university to further their academic mission, Cuomo said.

The 10-year program will be available to new startups, companies that relocate to New York state and to New York companies that expand within the state and create new jobs. Companies that compete with firms in the region will be ineligible.

During the 10-year period, new companies are expected to become established in the region. By the time the program ends and the companies will have to pay taxes, Cuomo said that he hoped and expected that the existing tax structure will have been modified and taxes lowered so the firms’ tax payments would be less devastating.

Under the program, the 64 SUNY campuses, of which 55 are upstate, will be tax-free communities. The program will also dedicate up to 3 million square feet of tax-free space to about 100 upstate private colleges and universities. In addition, each campus involved will be allowed to designate up to 200,000 square feet in the vicinity as a tax-free zone.

Cuomo outlined a two-step agenda to address a 40-plus year economic downturn in upstate New York, ever since manufacturing jobs left the state in the 1950s and ’60s.

“First, battle the reality and the perception of New York as a high tax state,” said Cuomo, adding that his administration has helped pass a property tax cap and cut middle-class taxes. “We have one of the worst tax structures in the nation; we are either dead last or second to last,” which forces new startups to base themselves in such states as Florida, Texas and North and South Carolina, all of which have no income tax.

He added: “Jobs are being generated from higher education institutions, not just in this state, not just in this country, [but] around the globe. That’s what’s generating the jobs,” Cuomo said.

“Cornell already plays an important economic role in the state and not only as an employer and educator,” said Cornell President David Skorton in remarks prior to Cuomo’s speech. “In just the last three years, Cornell research in Ithaca, Geneva and Weill Cornell Medical College in New York City has led to the development of 29 startup companies; 25 are still active and 17 of them are still in New York state.”

In this way, START-UP NY seeks to hit a “sweet spot” that partners entrepreneurs with academia and the regional economy, Cuomo said.

“It’s a major transformation of the tax structure of upstate New York that I believe is going to be a game changer for the basic dynamic for the upstate economy,” the governor said.